Investors and economists have become far more sceptical over the past two weeks that the U.S. Federal Reserve will announce a new round of bond purchases at its September meeting, according to Reuters polls over the last week.
While hardly portraying a surging economy, U.S. economic data over the last two weeks has largely come in a little better than forecast.
That has persuaded many economists and fund managers a new round of monetary easing from the central bank is no longer a safe bet, although polls of both groups suggest the result of its September policy meeting will be a close call.
Only 44 percent of fund managers in the Reuters global asset allocation poll published Thursday now think the Fed will announce a third round of quantitative easing, down from 70 percent in the same poll last month.
Monica Defend, head of global asset allocation at Italy-based Pioneer said she does not think the Fed will launch a new round of bond buys before the end of the year.
"The presidential elections are coming up in November and any move may not be recommended until the January inauguration," she said.
Similarly, a poll of economists last Friday gave a 45 percent chance of a new round of quantitative easing resulting from the Fed's September 12-13 policy meeting.
By contrast, another Reuters poll published earlier this month showed expectations that the Fed would resort to QE3 at some point in the future running at 60 percent.
Still, minutes from the Fed's last meeting suggest it was likely to deliver a new round of monetary stimulus "fairly soon" unless the economy improved considerably.
Fed Chairman Ben Bernanke has eased monetary policy aggressively to battle the Great Recession, culminating in three years of ultra-low interest rates and $2.3 trillion in asset purchases.
The U.S. economy grew a little faster than thought in the second quarter, although not enough to close the door on more bond purchases, and jobs growth remains weak overall, despite a rebound in July.
That has brought the Fed's performance under political scrutiny ahead of the November 6 presidential election, particularly among opposition Republicans who have criticised quantitative easing as an inflation timebomb.
Bernanke will speak on Friday at the Fed's annual central banking retreat in Jackson Hole, Wyoming, where he is expected to keep markets guessing about the timing of another round of bond purchases, while keep alive expectations for more action.
